Nicaragua Canal – Developer FAQ and Interview

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June 13, 2013

Relative locations of the Nicaragua and Panama Canals

Some new details are in on the proposed Nicaragua Canal which is to be designed, built, operated and maintained by Hong Kong-based HKND group.

Nicaraguan Assembly OKs $40 Bln Chinese Canal To Rival Panama’s

MANAGUA, June 13 (Reuters) – Nicaragua’s national assembly on Thursday approved a 50-year concession to a Hong Kong-based Chinese company to design, build and manage at an estimated cost of $40 billion a shipping canal across the central American nation that would compete with the Panama Canal.

The proposal by HK Nicaragua Canal Development Investment Co Ltd’s (HKND Group) envisages linking Nicaragua’s Caribbean and Pacific coasts and includes plans for two free trade zones, a railway, an oil pipeline and airports.

The government says the proposed canal, which has been mooted for years by Nicaraguan lawmakers, could add up to 15 percent to the country’s gross domestic product. Continue Reading…

Here’s an interview with HKND spokesperson, Ronald MaClean-Abaroa:

Nicaragua Canal Project FAQ from HKND:

What is the Nicaragua Canal and Development Project?

Nicaragua Canal and Development Project is intended to be a new transportation and logistics hub that will connect the Atlantic and Pacific oceans, spanning Central America. The legislation enabling commencement of the Nicaragua Canal and Development Project authorized the development of a canal and several other possible projects that would support the advancement of global trade and the development of a new trading and logistics hub in Nicaragua.

All these components are subject to comprehensive feasibility studies, including economic, technical, and environmental/social studies that are now being conducted and will take a period of time to complete. World-class experts in each field have been engaged to perform these studies and work is underway.

Is there a need for this new canal?

Our preliminary commercial and economic analysis indicates there is a substantial need for a new canal that has the potential to transform global trade. The rapid growth in east-west trade and ship sizes provide a compelling argument for the construction of a second, substantially larger canal across Central America. Trends in ship size alone indicate a significant potential market that can only be served by the Nicaragua Canal.

Global trade continues to increase, with maritime trade routes changing and competition increasing. Shippers and shipping lines need faster delivery routes and continually increasing cost efficiencies that come from much larger ships.

Global shipping trends demonstrate that in the future a significant percentage of the global fleet will either need to, or choose to, look for an alternative route that connects the Eastern Coast of North America, Gulf Coast of the United States, and South America with Asia. A significant percentage of the potential demand will be from the growing number of ships that are already unable to cross through any existing Canal, including post-expansion Panama. Nicaragua’s location at the center of global trade routes suggests a range of potential benefits that could make global trade more efficient and economical for shippers and their customers worldwide.

By accommodating the next generation of the world’s largest ships and by providing an alternative for Atlantic-Pacific trade, the Nicaragua Canal and Development Project holds the potential for faster travel times, lower costs, and added dependability.

Why are you building the new canal in Nicaragua?

Nicaragua has long been considered an ideal location for a canal connecting the Atlantic and Pacific oceans due to its low-lying topography and its natural waterways, including navigable rivers and Lake Nicaragua. The idea of a canal through Nicaragua has been explored for over a century by the people of Nicaragua, and with the agreement reached between the government of Nicaragua and HKND Group, the dream has taken a major step forward.

What is the relationship between HKND Group and the government of Nicaragua?

The government of Nicaragua chose HKND Group and granted HKND Group the exclusive rights for the planning, design, construction, operation and management of the Nicaragua Canal and Development Project and other infrastructure projects.

On September 6, 2012, the government of Nicaragua and HKND Group executed a memorandum of understanding (MOU) to lay out the scope of the project. On October 31, 2012, the parties signed a Deed of Cooperation further detailing the project.

How will Nicaragua benefit?

The Nicaragua Canal and Development Project should be a catalyst for economic growth in Nicaragua and the Americas. By building critical infrastructure and further integrating Nicaragua and the region into the global economy, we believe the project will spur significant economic and social development and job growth. As the infrastructure is analyzed, planned, built and maintained, we expect there will be a strong demand for qualified workers, which will drive job training and new opportunities.

As significant investments are made in Nicaragua’s vital infrastructure, such as improvements to ports, airports, roads, and other facilities, additional new benefits and opportunities are expected to be generated. Moreover, we believe the establishment of Free Trade Zones and the development of eco-tourism zones will stimulate further growth, investment and opportunities.

How will the rest of Latin America benefit?

There is the potential for the region to benefit in many different ways as trade is attracted to this new free-trade zone of commercial activity because of its advantageous geographic location. Access to the growing markets of Africa and Asia will be facilitated. In addition, Latin American companies will have the opportunity to participate in competitive tendering processes as the infrastructure is built.

Will other countries be involved? How?

HKND Group is committed to the international nature of this project and to including in the development and building of the project regional and international companies. Already, leading international consultants are engaged in multiple aspects of the feasibility studies and in managing outreach to multiple constituents with a direct or indirect interest in the success of the project. HKND Group is committed to competitive tendering processes consistent with global best practices for fairness and openness for each phase of work and to include qualified Nicaraguan, regional and international firms in each tender.

Where exactly will the Canal be built?

HKND Group is currently working on an analysis of the best route. We have engaged Environmental Resources Management (ERM), one of the world’s leading sustainability consultancies, to independently assess the environmental and social impact of various routes that are under consideration. The HKND Group has made the decision that the Canal will not run through the San Juan River.

What are the environmental implications of the project?

HKND Group is committed to building the Nicaragua Canal and Development Project in a manner that conforms with international best practices.

As such, HKND Group has chosen Environmental Resources Management (ERM), world-class environmental consultants, to analyze in great depth the implications of the Nicaragua Canal and Development Project. HKND Group is committed to explore this area with great care and to adhere to international standards of environmental responsibility as it proceeds.

What are the plans for people affected by building the project?

As noted above, the Nicaragua Canal and Development Project is now moving into a pre-feasibility phase and HKND Group has engaged a team of world-class experts to evaluate the potential environmental and social effects of the project. The HKND Group is committed to engaging with local, national and international stakeholders within a framework of environmental and social responsibility.

Who is Environmental Resources Management (ERM)?

Environmental Resources Management (ERM) is one of the world’s leading sustainability consultancies, and a global provider of environmental, health, safety, risk, social consulting services and sustainability related services. ERM has over 140 offices in 40 countries and territories employing more than 5,000 people. ERM is committed to providing a service that is consistent, professional and of the highest quality. Over the past five years ERM has worked for more than half of the Global Fortune 500 delivering innovative solutions for business and selected government clients helping them understand and manage the sustainability challenges that the world is increasingly facing.

Additional details on the Nicaragua Canal and Development project can be found at the HKND website.

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